2 August 2020
Conscience of a Centrist
The International Monetary Fund (IMF) barbarians are at the gate. And there is little resistance to ward them off. The intelligentsia on the right is cloaked in complacency, while the thought leaders in the radical left can only but hope they were in power.
It is a costly mistake for South Africa and other emerging economies to fall prey to the IMF COVID-19 rebranding exercise.
The IMF is no friend of Africa and will not start being one now. But like any other parasitic organisation, the IMF has cunningly repositioned itself as the knight in shining armour for emerging markets to navigate their way out of the crisis.
And Pretoria, like many capitals on the continent and beyond, has fallen for this latest public relations stunt. The IMF and the World Bank are the same grouping that played a central role in shaping our current model of globalisation.
It achieved the new world order by ruthlessly imposing policies that held countries back from climbing up the income ladder.
Most developed countries in the West adopted some form of industrial policy in their past. However, when the IMF comes in – deregulation, privatisation and a “flexible” labour regime come tagging along.
South Africa is a microcosm of what the IMF has little tolerance for. Private capital barbarians frown on our “rigid” labour laws, which guarantee fairness. Attacks on labour rights and the suppression of wages are key components of the strategy of the IMF because cheap labour supposedly attracts more investment.
South Africa is by far the most industrialised economy on the continent – and the capitulation of Pretoria has sent a clear message to the IMF and its sister organisation – the World Bank – that Africa is up for the taking.
The fund agreed to lend South Africa $4.3-billion (R73-billion), the largest loan any African country has received since the onset of COVID-19.
Finance Minister Tito Mboweni has told the IMF that South Africa wants to reverse the upward trajectory of the public debt-to-GDP ratio by possibly introducing a debt ceiling. This is a teaser of what is to come. South Africa’s debt to GDP is on an unsustainable path and the indecisiveness of this government to implement structural reforms and take hard fiscal decisions will lead us straight back to the IMF – only this time it will be worse.
Show me one poor country that followed the advice from the IMF and the World Bank that has become significantly richer and I will gladly walk from Cape to Cairo without breaking a sweat.
President Cyril Ramaphosa should get a grip on the situation and lead. There is hope yet that this economy can be rebuilt – but it would not be via unproductive investment conferences and this or that indaba.